Assume a company has only one service department and two operating departments (A and B). The service department's budgeted variable costs in total and on a per unit basis were $200,000 and $5, respectively. Its total actual variable costs were $205,500. The service department's budgeted and actual fixed costs were $300,000 and $310,500, respectively. The service department's variable costs are allocated to the operating departments based on actual number of employees for the current year, whereas its fixed costs are allocated based on the long-run average number of employees in the operating departments. The following additional information was provided for Departments A and B: Actual number of employees for the current year Long-run average number of employees Department A 9,000 12,000 Department B 30,000 32,000 The total amount of service department costs that should not be charged to either department is closest to:
Assume a company has only one service department and two operating departments (A and B). The service department's budgeted variable costs in total and on a per unit basis were $200,000 and $5, respectively. Its total actual variable costs were $205,500. The service department's budgeted and actual fixed costs were $300,000 and $310,500, respectively. The service department's variable costs are allocated to the operating departments based on actual number of employees for the current year, whereas its fixed costs are allocated based on the long-run average number of employees in the operating departments. The following additional information was provided for Departments A and B: Actual number of employees for the current year Long-run average number of employees Department A 9,000 12,000 Department B 30,000 32,000 The total amount of service department costs that should not be charged to either department is closest to:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Multiple Choice
O
O
O
O
$21,000.
$32,000.
$18,000.
$0.
Transcribed Image Text:Assume a company has only one service department and two operating departments (A and B). The service department's budgeted variable
costs in total and on a per unit basis were $200,000 and $5, respectively. Its total actual variable costs were $205,500. The service
department's budgeted and actual fixed costs were $300,000 and $310,500, respectively. The service department's variable costs are
allocated to the operating departments based on actual number of employees for the current year, whereas its fixed costs are allocated
based on the long-run average number of employees in the operating departments.
The following additional information was provided for Departments A and B:
Actual number of employees for the current year
Long-run average number of employees
Department A
9,000
12,000
Department B
30,000
32,000
The total amount of service department costs that should not be charged to either department is closest to:
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